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Business Corporation Law § 1008. cont

The Court of Appeals granted leave and concluded that the Second Department had correctly dismissed the appeal. The Court of Appeals stated that, with limited exceptions, an appeal may be taken to the Appellate Division as of right from an order deciding a motion made upon notice when, among other possibilities, the order affects a substantial right. There is, however, no right of appeal from an ex parte order, including an order entered suasponte. The Court also stated that an order made suasponte is not an order deciding a motion on notice is apparent from various CPLR provisions, including the definition of motion and the provision for dismissal for failure to prosecute, which distinguishes between a court initiative’ and a party’s motion. While the trial court had created a procedure to ensure that the parties had an opportunity to be heard before the court acted, the Injury Court stressed that the submissions ordered suasponte by the trial court were not made pursuant to a motion on notice as contemplated by CPLR 5701 (a) (2). While the procedure in this particular case may well have produced a record sufficient for appellate review, there is no guarantee that the same would be true in the next case. Moreover, the amount of notice will vary from case to case, and its sufficiency may often be open to debate. Adherence to the procedure specified by CPLR 5701 (a) uniformly provides for certainty, while at the same time affording the parties a right of review by the Appellate Division. We are therefore unwilling to overwrite that statute.

As is evident from the briefs, the record and the attorneys’ statements at oral argument, the order determining the value of the parcels was not the product of a motion made on notice. Rather, that order was issued suasponte and therefore is not appealable as of right.

Defendant’s letter to the court requesting a telephone conference to resolve issues related to the East Coast appraisal was not a motion to value the properties. It is beyond cavil that a motion is a request for an order (CPLR 2211) and defendant’s letter contained no request for an order. Thus, the letter plainly could not serve as a notice of motion. Additionally, and unsurprisingly since defendant was not seeking an order but rather a telephone conference, the letter did not specify a return date and was not accompanied by any supporting papers (CPLR 2214 [a] A notice of motion shall specify the time and place of the hearing on the motion, the supporting papers upon which the motion is based, the relief demanded and the grounds therefor. Because the letter neither contained a request for an order nor complied with CPLR 2214, it could not have served as a notice of motion. The absence of a medical motion is not a technical defect that can be overlooked; under Sholes a motion is required to generate an order that is appealable as of right.

Neither of the parties has argued that this action should be treated as a summary proceeding under Business Corporation Law § 1008. Although defendant asserted a counterclaim in this action for judicial supervision of the winding up of the affairs of SAR pursuant to Business Corporation Law § 1008, plaintiff asserted causes of action against defendant to recover damages for fraud, breach of fiduciary duty and under Business Corporation Law § 720, claims that need to be adjudicated in a plenary action, and both parties have litigated this matter as a plenary action, not a special proceeding. Nonetheless, despite the absence of a motion requesting the court to do so, the dissent would treat the action as a special proceeding and sanction Supreme Court’s determination of the parties’ substantive rights. Here, too, the dissent does not explain how its reliance on Business Corporation Law § 1008 is consistent with orderly appellate procedure or its recognition that parties are normally permitted to chart their own procedural course before the courts.

We note that the dissent assumes erroneously that both parties were afforded notice and opportunity to be heard on the use to be made of the disputed appraisal. To the contrary, the parties had no opportunity to make arguments or submit evidence regarding either the valuation of the properties or the validity of the stipulations before Supreme Court valued the properties. Thus, although we have the power to grant leave to appeal from an order that is not appealable as of right (CPLR 5701 [c]), we decline to do so.

Although Supreme Court’s order vacating the stipulations is not before us and the medical parties have not addressed its validity, the dissent nonetheless writes that the order is of highly questionable validity, and that there is a distinct probability that the order is a nullity. Thus, the dissent writes as to the merits of Justice Wright’s order, merely because a stipulation incorporating the essential terms of the parties’ agreement recites that it contemplates the execution of a more formal document does not thereby render the agreement unenforceable unless it expresses the parties’ clear intent not to be bound until the contemplated formal document has been executed. Given these statements, we think it prudent to underscore that we express no opinion on the subject. The dissent assumes that (1) an appeal from the order vacating the stipulations will be perfected, (2) this Court will vacate the order and (3) vacatur of the order will revive the moot order that is now before us. Even if all these assumptions were made, the order before us would still be a suasponte order from which no appeal lies. Motion seeking leave to strike record denied.

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